Economic Observer reporter Zheng Chenye

On October 5th, Huawei and Qualcomm announced the signing of a multi-year patent licensing agreement, and Qualcomm will also purchase some of Huawei's US patents. The news immediately sparked market discussions.

In terms of cross licensing, both parties mutually authorize the use of each other's patents, and after deducting their respective licensing fees, one party pays the difference to the other, with the former being the "net payer". On the day of the agreement's announcement, market information stated that Qualcomm will become the "net payer" in two cross licenses for the first time. In addition, the market speculates that this agreement involves Huawei's logic folding chip technology proposed in the "Tao Law".

Qualcomm seems to be very concerned about these interpretations from the outside world. On October 6th, Qualcomm responded that the terms of the agreement are confidential, but the statement that Qualcomm is the "net payer" of the license agreement is not accurate, and the statement that the agreement involves logic folding chip technology is also untrue.

In fact, the patent exchange between Huawei and Qualcomm has a long history and has gone through ups and downs. In recent years, the respective situations of the two companies have also undergone significant changes.

Cross licensing and patent acquisition

According to a joint announcement by Huawei and Qualcomm, the agreement includes two parts: first, the two companies cross license their respective patent portfolios in the fields of 5G, computing, artificial intelligence, and network connectivity; second, Qualcomm purchases some of Huawei's US patents in the fields of computing, artificial intelligence, network connectivity, and other technologies. The transaction will be completed after obtaining the necessary regulatory approvals. According to the announcement, the agreement reflects the joint commitment of both parties to intellectual property rights and patent licensing based on the principles of fairness, reasonableness, and non discrimination.

The relevant executives of both companies have affirmed each other in the above announcement. Huawei's Chief Intellectual Property Officer, Fan Zhiyong, stated that Huawei has been investing in basic research and development for decades and has made extensive contributions to 4G and 5G standards, such as signal transmission technology based on polar codes (a channel coding scheme in 5G standards); The agreement not only showcases the value of Huawei's innovation, but also reflects Qualcomm's fundamental contribution to modern communication technology.

John Han, Executive Vice President and General Manager of Technology Licensing Business at Qualcomm, believes that Qualcomm's continued investment in basic wireless technology research and development has promoted the intergenerational evolution of mobile communication technology. The agreement once again confirms the industry's recognition of Qualcomm's leading position in 5G technology and the success of 5G standard essential patent licensing projects; At the same time, the agreement also reflects Qualcomm's recognition of Huawei's continuous innovation and intellectual property in 5G and other technology fields.

However, the Economic Observer reporter noticed that neither company disclosed the price and list of Qualcomm's purchase of Huawei patents, nor did they specify the duration, effective time, and deduction method of the license agreement. The regulatory approval also did not specify which institutions were involved. In other words, until the specific terms are made public, the outside world cannot determine who the net payer is.

Although Qualcomm confirmed in its market response on October 6th that it was buying some of Huawei's non cellular communication US patents, which are patents other than the mobile communication technology used to connect mobile phones to base stations, Qualcomm did not specify the purpose of buying Huawei's patents, nor did it link this transaction to data center business.

In fact, Qualcomm has been expanding its presence beyond smartphones in the past two years. In June of this year, Qualcomm raised its revenue target for non mobile phone business in fiscal year 2029 to $40 billion, with a target of over $15 billion for data center business. By then, mobile phone business is expected to account for about one-third of its chip business revenue.

A communication industry analyst from a large securities firm in southern China told Economic Observer reporters that buying patents in computing, artificial intelligence, and network connectivity can not only supplement Qualcomm's patent portfolio, but also reduce the risk of being sued for infringement in new businesses in the future. It is not appropriate to simply understand this patent deal as a reversal of payment direction between the two companies.

Not Surprisingly

This cross licensing continues the long-standing licensing relationship between the two companies: as early as November 2001, Qualcomm announced the signing of a commercial license with Huawei for CDMA (a mobile communication technology standard) network products; By 2003, Huawei had appeared on both Qualcomm's terminal and infrastructure licensing lists; In April 2004, Qualcomm announced in official information that Huawei and other manufacturers had chosen Qualcomm's chipset and system software to design 3G smartphones and data cards.

Afterwards, Huawei paid patent fees to Qualcomm for a long time, but there were also setbacks during the process. According to Qualcomm's financial report, Huawei has not declared or paid patent fees according to the original licensing agreement since 2017. The two companies rely on two temporary agreements to maintain partial payments. Qualcomm received a total of $1.05 billion from them in the 2018 and 2019 fiscal years, accounting for approximately 12% and 10% of their technology licensing business revenue, respectively. Qualcomm also pointed out that this is not the full amount of patent fees payable.

The original license agreement between the two companies expired on December 31, 2019. In July 2020, the two reached a settlement and signed a new long-term global patent license agreement, covering Huawei's product sales from January 1, 2020. Qualcomm obtained partial patent authorization from Huawei in the agreement.

Qualcomm's technology licensing business typically centers around essential patents for cellular communication standards, charging licensing fees to device manufacturers such as smartphones. The related revenue for fiscal year 2025 is $5.582 billion. For Qualcomm, signing and renewing patent licenses is the norm in this business.

In February 2025, Qualcomm mentioned in its quarterly report that its patent license agreements with major terminal manufacturers are mostly long-term agreements, with remaining terms expiring between fiscal years 2027 and 2031. It has reached renewal agreements with two important Chinese terminal manufacturers, while its license agreement with Huawei has expired and is still under negotiation.

Qualcomm President and CEO Amon said at an investor conference in May 2025 that the technology licensing business is like an annuity, not Qualcomm's growth engine, but a good business. Qualcomm has renewed all contracts with other Chinese customers and is still in communication with Huawei, but cannot give a deadline.

That is to say, from the historical relationship between the two companies, signing a cross license this time is not surprising.

However, it is worth noting that according to publicly available information, Huawei has been transitioning from a net payer to a net beneficiary in technology licensing in recent years. As of June 2019, it disclosed that its cumulative external patent licensing fees exceeded $6 billion, and its cumulative intellectual property revenue since 2015 exceeded $1.4 billion; In 2021, its patent licensing revenue exceeded expenses for the first time; In 2024, its patent licensing revenue is approximately 630 million US dollars.

According to public information, as of the end of 2025, Huawei has signed over 260 patent licensing agreements with major information and communication companies in the United States, Europe, Japan, and South Korea, of which 34 were newly signed in 2025. According to data disclosed by Huawei, as of the end of 2025, the number of valid authorized patents held by Huawei worldwide has increased to approximately 165000. According to statistics from IFI Claims, a US patent data agency, Huawei will receive 3052 new US patent authorizations in 2025, ranking fourth among the companies with the most US patent authorizations that year.

These patents come from Huawei's years of research and development investment. According to a recent public introduction by Yu Chengdong, Executive Director of Huawei and Chairman of Terminal BG, from 2007 to 2025, Huawei's cumulative R&D investment exceeded 1.8 trillion yuan, and the proportion of R&D investment to revenue has increased from about 10% in the early years to over 20% in recent years. According to Huawei's annual report, its research and development expenses will be 192.3 billion yuan in 2025, with a cumulative R&D investment of over 138 trillion yuan in the past decade.

The patent licensing projects listed on Huawei's official website include three categories: mobile phones, Wi Fi, and cellular Internet of Things. In addition, with authorization in the field of video encoding and decoding, Huawei's current externally charged patents mostly belong to these communication and video standards. Huawei's new technologies in chips and computing have only been gradually applied to products this year, and logic folding is one of them.

(Author Zheng Chenye)